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Comparing Brokerages - seeking advice
Old 09-15-2013, 02:16 PM   #1
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Comparing Brokerages - seeking advice

I started investing in no-load mutual funds about 1 year ago, so I'm fairly new. I have a Scottrade Roth IRA and have learned that the available no-transaction fee funds through this institution are not that great (in my opinion) for developing a long term diversified portfolio. I would like to move $15 - 18K to another brokerage (Roth IRA). Essentially, I'm trying to develop a diversified long-term portfolio largely based around John Bogle's and Paul Merriman's advice (I'm continuing to learn different strategies), avoid fee's and keep expenses to a minimum. From my reading on these forums I've found that it is not uncommon for people to have investments at multiple institutions. I don't mind having accounts at a few brokerages to start with, but ideally, I would like to have one account. Finally..... I just wanted to see what brokerages people prefer on this forum and hear any advice you may have.

I've done pretty extensive research on Vanguard and Charles Schwab (read reviews and spoke to service reps), I've also read reviews on Fidelity. I've looked at T.Rowe Price a little bit.

I really like the low expenses and funds at Vanguard, however, the $3000 minimum for their mutual funds seems a little high to put together a portfolio exclusively with them - considering the amount of money that I have (some of their funds require more than $3000). Comparatively, Charles Schwab's minimum investments are $1000 with slightly higher expense ratios. I also like that Charles Schwab has customer service through online chat (so I don't have to call and wait for customer service) and a wide variety of NTF no-load funds. Fidelity's in-house funds seem to be a little better than Schwab's, but I think Schwab offers more no-transaction fee no-load funds (if you include non-family funds). These are just my impressions from the research I've done. I don't mean to sound like I'm an expert on these brokerages - I'm merely a novice investor trying to learn.

I'm leaning towards putting all of my money in Vanguard to take advantage of low expenses and build my portfolio over time. Alternatively, I'm considering moving some of my money to Vanguard to take advantage of a few funds and some of my money to Charles Schwab or Fidelity to expand the portfolio. Am I thinking along the right lines?

Thanks in advance for any input!
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Old 09-15-2013, 02:29 PM   #2
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I've never dealt with Vanguard, so I cannot comment.

We have accounts with Schwab and Fido. They are frankly about the same, with good service and low prices. Most of our business is with Schwab. I don't use many mutual funds. Instead, I use ETFs. If you use Schwab's house brand of ETFs (which are generally very low cost) they waive all commissions. So you can buy as little as 1 share of a Schwab ETF and pay no commissions. How is that for a low minimum? I believe both Fido and VG have jumped on that bandwagon.
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Old 09-15-2013, 02:50 PM   #3
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The number of NTF funds is a just a joke. If they have 10,000 NTF funds and you don't want to buy any of them, what's the point? There are less than about 10 mutual funds that one should ever bother with, so check to see they have what you want if you go the fund route. Also if this is a taxable account, consider what you will use for tax-loss harvesting pairs.

Also note that the reviews mostly don't cover how real people use the brokerages. They cover how traders use the brokerage. A buy and hold and rebalance client won't care about most of the things reviewed.

Examples:
1. Research? Who cares? One knows what to buy: passively-managed index funds.
2. Quick trades? Who cares?
3. Low commissions? One shouldn't have to pay ANY commissions nowadays.

Things that are important:
1. Great 1099s and easy downloading to TurboTax
2. Dividends paid in a timely fashion and not one or two days late.
3. Index funds with highest fraction of qualified dividends (100%)
4. Easy web interface indicating gain/loss so one knows when to TLH and minimizing taxes.
5. Maybe phone support 24/7 if you look at your portfolio in the evenings and on Sundays.
6. Easy ACH transfers in/out and quick, so in an hour or less.
7. Etc.
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Old 09-15-2013, 03:29 PM   #4
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Use Fidelity for my T-IRA and Vanguard for all other after tax investments. Have never had a problem with either. Just don't like to keep all my eggs in one basket.
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Old 09-15-2013, 04:54 PM   #5
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I am moving almost all of my accounts, other than my gov't TSP, over to Vanguard (from USAA) in order to minimize expenses. The $3000 minimum is a little bit higher than some other places (like USAA), but IMO it is worth it. When you look at the difference between S&P 500 index fund expenses, it became a no-brainer for me. Soon will have a tIRA, rIRA, and taxable brokerage there. Eventually DW will roll her 403b to Vanguard. Then we'll have one smaller index fund still with USAA and my TSP account.

I don't want to be scattered all over the place, but paying the least possible amount (both in taxes and expenses) is the one thing I can really control about my investments. I guess that pretty much makes me a Boglehead. Vanguard seems to be the best place to do it.
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Old 09-15-2013, 05:05 PM   #6
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I use Schwab and Fidelity...I like both. Schwab has better customer service if I compare both.
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Old 09-15-2013, 06:45 PM   #7
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I use both Schwab and VG. I don't think you can go wrong with either or with FIdo. Just keep an eye on transaction fees. Some of my funds have them at VG, but not Schwab and vice versa.
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Old 09-15-2013, 07:02 PM   #8
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I will give another vote for Vanguard. I have had an account with them for 8 years, and really like their low-cost funds, good website, and great customer service. I also plan on moving money from other accounts to Vanguard over the next few months, as I have worked to vastly simplify my overall portfolio.

The minimum investment hasn't been an issue for me since I have always tried to limit the number of funds I'm invested in. Plus, you can get additional cost savings with "Admiral" shares (higher minimums), which is what I have tried to do as much as possible.
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Old 09-15-2013, 07:39 PM   #9
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Have you considered just staying @ Scottrade and using ETFs instead of mutual funds?
That's what we do with out Roth IRAs, $7 once a year (when funding IRA) is not too bad of a price to pay (comes to 0.12% for $5500 investment)
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Old 09-15-2013, 07:44 PM   #10
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I see no reason to remain at Scottrade. There are brokers that charge no fees and have better index fund options, so it would be better to switch to one of them at the earliest possible moment. That way any taxes, unrealized gains, etc will be minimized.
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Old 09-15-2013, 08:07 PM   #11
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If you want low cost index funds I'd go with Vanguard and build your portfolio $3k at a time as you can. I have my Individual 401k with E*Trade, which had $1k minimums for me I think. But I wouldn't let that derail your long-term planning.
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Old 09-15-2013, 10:15 PM   #12
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I became frustrated with Fidelity when they continually tried to sell me fixed annuities. Never had that problem with Schwab. Plus their website is incredibly easy to research individual stocks on .... I use core - explore approach. Currently 60% core (ETFs: SPY, SCHA, SCHD, SCHF), 30% fixed (CDs, bonds, cash), & 10% individual stocks
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Old 09-15-2013, 10:48 PM   #13
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Wow! Thanks for all the input. I didn't expect to get this much feedback. To answer Sailor's question. Yes, I have considered using ETF's. However, I'll probably start doing that at a later date. For now, I need to pick a brokerage, set up a good portfolio and then learn about ETF's. I currently do not know enough about the fees etc. associated with ETF's to invest in them. I know a lot more about mutual funds.
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Old 09-15-2013, 11:17 PM   #14
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Quote:
Originally Posted by Luhar View Post
I have a Scottrade Roth IRA and have learned that the available no-transaction fee funds through this institution are not that great
You don't need to move your money. Just stay at Scottrade and use low-fee ETFs.

Here's how to do Boglehead-style investing in a Scottrade account:

Scottrade - Bogleheads
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Old 09-15-2013, 11:38 PM   #15
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Wow just wow. Do they suggest 11 ETFs? I guess mine is conservative with just 4 ( SP500, dividend, small cap, international) with 3 for income but it lets me sleep at night
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Old 09-16-2013, 12:06 AM   #16
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Both my sons use Scottrade. Buying mutual fund via Scottrade is expensive. But Scottrade only charges $7 for any ETFs and stocks transaction.

I have Schwab and TDAmeritrade where I do all my trading. Both Schwab and TDAmeritrade have their list of funds/ETFs with no transaction fees. Otherwise Schwab charges like ~$9 per transaction and TDAmeritrade charges ~10 per transaction. Both have pretty good web sites.

I also have a Vanguard account, not a brokerage account, where I can only buy Vanguard funds/ETFs for no transaction fee.
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Old 09-16-2013, 01:36 AM   #17
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I have Schwab and have been with them for years with no complaints. They have great customer service and I've done many rollovers and a couple of complicated asset transfers with them without issue. They also have banking, check writing and reimburse all ATM charges.
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Old 09-16-2013, 03:56 PM   #18
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Yes, you are thinking along the right lines, and you are wise to stick with mutual funds until you learn more about he market, and build up a decent sized portfolio. All of the companies mentioned in your original post are great companies with good customer service; you just have to determine which ones are best for you. You also might want to consider Muriel Siebert, as they allow you to invest in any Fidelity fund commission free, both ways. I believe they are the only brokerage outside Fidelity which allows that.
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Old 09-16-2013, 04:57 PM   #19
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Thanks - I've never heard of Muriel Siebert. I'll look into that.
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Old 09-16-2013, 05:16 PM   #20
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Check out: www.siebertnet.com and also www.sharebuilder.com It is not good to keep all of your eggs in one basket, but you don't need to go too far in the other direction, either, with too many accounts.
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